The stock’s almost-quadrupling over the past year is overdone, he said in a commentary cited by Bloomberg. The gains stem from investor “hope” that Penn can take advantage of the online betting craze, he wrote.
Penn National shares recently traded little changed at $104.23. It has traded on Thursday up as much as 1.4% and down as much as 2.2%. Adam has a price target of $60 on the Wyomissing, Pa., company.
One problem is that Penn offers its Barstool app only in Pennsylvania, Adam said. Another is the chief financial officer’s sudden departure this month. “Simply put, there are too many red flags for us to justify a hold rating,” he said.
Meanwhile, sports-betting stocks got a boost on Tuesday following reports that the Texas governor's office reached out to states that have legalized sports betting, like New Jersey, for advice on the issue.
Craig-Hallum analyst Ryan Sigdahl wrote that the update is notable because Texas has "long been opposed to gambling." Additionally, bills out of Oregon and Kentucky are also signs that the sports-gambling footprint in the U.S. could be expanding.
Last week, New York Gov. Andrew Cuomo proposed to enable online sports betting.
Also on Tuesday, shares of sports-streaming network fuboTV (FUBO) - Get Report also rose, after the company said it agreed to acquire sports-betting company Vigtory with plans to launch a sportsbook this summer.
Terms weren't disclosed. FuboTV expects to close the deal in the first quarter, subject to conditions it didn't specify.